HSBC 2002 profit up as bad debts ease

  • Business
  • Tuesday, 04 Mar 2003

LONDON: Global banking giant HSBC Holdings plc reported yesterday a 20.6% rise in 2002 pre-tax profit after goodwill amortisation to US$9.65bil, as charges for bad debts eased US$716mil to US$1.32bil. 

But HSBC, based in Britain but with operations around the world, said prospects for 2003 were hard to call amid economic doubts, fears of a war in Iraq, and tumbling stock markets. 

As a result of the improved results, HSBC boosted its total dividend payout for 2002 by 10.4% to 53 US cents a share. 

The bank also said it expected to complete its takeover of US consumer finance company Household International in the first quarter of this year. The deal, worth US$14bil when announced, raises HSBC’s profile in the world’s biggest consumer market, but comes as the US economy is stuttering. 

HSBC has been looking to diversify its earnings to cope with an economic downturn in its key historical market of Hong Kong and tough competition in Britain. 

The group's Hong Kong unit, The Hongkong and Shanghai Banking Corp, said yesterday its 2002 net profit sagged by just over 1% to HK$25.9bil from HK$26.24bil in 2001 despite surging provisions for bad credit card loans. 

Provisions for bad and doubtful debts dipped slightly to HK$2.25bil for 2002 from HK$2.26bil a year earlier. 

“The outlook for 2003 is characterised by the prospects of continuing deflation in Hong Kong, lack of demand for loans, plus pressures on margins,” Hongkong and Shanghai Banking Corp chairman David Eldon said. 

Higher credit card charge-offs of HK$2.29bil, compared with HK$1.22bil in 2001, were offset by “net releases and recoveries from the commercial and corporate loan books,” the bank said in a statement. 

Meanwhile, HSBC's 62.14%-owned Hang Seng Bank, Hong Kong's third largest lender, reported a 1.5% drop in 2002 profit to HK$9.96bil, due to a fall in net interest income and higher bad debt provisions. – Reuters  

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